Mikati in Myanmar: Violating European Sanctions?

Ali Nour
Lebanese Journalist
April 1, 2022
The M1 Group’s recent deal to take over Telenor Myanmar raises some uncomfortable questions over the company’s relationship with the country’s military authorities and respect for human rights.

On Friday, March 18, M1 Group, owned by Lebanese Prime Minister Najib Mikati and his brother Taha, celebrated. After a long wait the military authorities in Myanmar finally approved its acquisition of Telenor Myanmar.

The brothers had waited since last July for approval of the sale of Norwegian company’s Myanmar branch, which had been suspended several times for unknown reasons. Telenor “escaped” from the Myanmar market and resorted to this deal, as the military authorities, which had seized power on February 1, 2021, insisted on including tracking and wiretapping technology on the mobile phone network “for security reasons,” which conflicted with the professional and ethical standards of the European company.

Here in particular the Mikati brothers came to replace the Norwegian company, benefiting from the telecom experience they gained in such authoritarian countries as Syria, Sudan and Yemen. In such countries, management of the technical side of the sector is mixed with political and security calculations. The M1 Group specializes in working in such political climates.

Partnership with the Revolutionaries

So, what changed between last July and mid-March for the Myanmar Military Council to approve the deal?

Simply put, the M1 Group agreed to include a partner in the deal, Shwe Byain Phyu (SBP), which acquired 80% of the network with some 18 million subscribers. SBP is known for its work and cooperation with the country’s military apparatus. Note that SBP’s main line of work actually lies in the petroleum sector.

What the Mikati brothers actually did to obtain approval for the deal was sharing ownership of Telenor Myanmar with the powerful financial elite in the country, whose interests are intertwined with those of the military in power. ‘This is what the Mikati brothers did in all the developing markets they entered. They would sign a partnership with the politically powerful, as happened in Syria, where they shared the mobile phone sector with Bashar al-Assad’s cousin Rami Makhlouf, and in Yemen, where they shared the sector’s revenues with businessmen affiliated with the ruling Houthi movement.

Breach of International Sanctions

However, the seriousness of the Mikati brothers’ move in Myanmar is not limited to the financial partnership with those close to the military authorities and facilitating their control over the telecom sector, but rather to circumventing the international sanctions imposed on the putschists.

Article 3.1 of the EU restrictive measures prohibits: “The sale, supply, transfer or export of equipment, technology or software intended primarily for use in the monitoring or interception by the Government of Myanmar/Burma, or on its behalf, of the internet and of telephone communications on mobile or fixed networks in Myanmar/Burma, including the provision of any telecommunication or internet monitoring or interception services of any kind, as well as the provision of financial and technical assistance to install, operate or update such equipment, technology or software, by nationals of Member States or from the territories of Member States shall be prohibited.”

In other words, what the M1 Group has done is facilitate the exit of Norway’s Telenor from Myanmar and replace it as the main telecom operator, which does not mind implementing the oversight the authorities want to impose.

This represents a circumvention of the European sanctions, which prevented Telenor from working in the market, and opened the door for the M1 Group to be held accountable in Europe, as it operates in two European markets, Cyprus and the Canary Islands.

The consequences are not limited to possibly holding M1 Group accountable for violating the sanctions in Europe, but also to possibly holding Telenor accountable, given the Norwegian company’s knowledge of the buyer’s intention to implement tracking and eavesdropping techniques, according to the wishes of the authorities.

Knowing that the organization Justice For Myanmar recently indicated that eavesdropping and tracking technologies are linked to the Myanmar telecom network, which will be activated as soon as Telenor exits the market and M1 Group takes its place.

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Legal Risks

The Mikati brothers’ total wealth exceeds $5.4 billion, according to the 2021 Forbes billionaires list. This wealth is distributed over investments in telecom in South Africa, Cyprus and the Cayman Islands, in addition to investments in fashion, retail trade and luxury real estate in the United States, London and Monaco.

If human rights organizations decide to track this wealth and try to have restrictions imposed due to the Mikati brothers violating international sanctions, their wealth could be at risk.

Such a prosecution would depend on investigative journalists’ ability to track and document the activities of the M1 Group in Myanmar, and confirm the company activated some sort of tracking system. It is thereby important to note that the Lebanese authorities recently received a request for judicial cooperation from Monaco regarding Prime Minister Najib Mikati. It is a case similar to European cooperation requests regarding the files of the Governor of the Lebanese Central Bank (BDL).

The Lebanese authorities are supposed to provide the judicial authorities in Monaco with financial information related to Mikati’s investments, his money in Lebanon and abroad, the sources of these funds and how they were accumulated over the years.

Similar requests for judicial cooperation have been directed to other countries, in which the Mikati brothers have significant investments. Part of Mikati’s real estate wealth is in Monaco, which puts it at risk of judicial investigations, as happened with BDL Governor Riad Salameh. It is not yet clear whether the request for judicial cooperation is related to the Myanmar file and Mikati violating European sanctions. However, there are numerous signs the Mikati brothers’ activities are prohibited under these sanctions, which indicates the possibility of triggering sanctions against Mikati.

The M1 Response

Daraj asked the M1 Group’s media office for a reaction. The group made it clear it could not answer on behalf of Telenor: “These are matters that belong to Telenor alone, to its discretion, and to the extent to which it is receptive to the circumstances surrounding doing business globally.”

The response evaded dealing with a fact known to everyone, which was announced by Telenor itself, namely that the exit from Myanmar is linked to “the deterioration of the security and human rights situation in the country.”This means M1 has filled the void created by Telenor’s unwillingness to work in environments that violate human rights, especially when it comes to tracking subscribers.M1 Group’s response said it “will never compromise on such fundamental issues as human rights, customer protection and individual property.” It also stressed the group will continue to fulfill its “legal and moral obligations towards tens of millions of users around the world.”

To this end, Investcom PTE, the entity through which M1 operates in Myanmar, will continue to adopt “the international standards required of telecom operators around the world that help to keep people connected.”Again, the response avoided dealing with the fact that Telenor’s withdrawal was due precisely to the incompatibility of working in accordance with its ethical standards.At the same time, the group’s response denied the existence of any relations between its local partner Shwe Byain Phyu and the military authorities and the fact that the company is subject to international sanctions, although it did acknowledge the company is “well-known” and has been a “prestigious group in Myanmar for decades.”

Finally, the response denounced the unfair characterization of the M1 Group, its founders and its way of doing business over many decades.

However, perhaps it is more appropriate to admit, for once, and in all fairness, that the M1 Group continues to invest in cross-border communication and infrastructure in a large number of developing countries, most of which are located in the Middle East and Africa, and most of which are considered poor or too dangerous to do business.

Finally, the response called “to prevent and limit the spread of reports not based on evidence and proof,” while assuring that M1 and all its subsidiaries, including Investcom PTE, “will never violate any rules or sanctions, whether European or international, in Myanmar or any other country around the world.” However, the M1 Group’s local partner in Myanmar is not a specialist in the field of telecom and is involved in partnerships with the Myanmar Economic Holdings Limited, which is closely affiliated with the military authorities and subject to European, American and British sanctions.

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